I consult on the continuum between future thinking, strategy and innovation to introduce opportunities to organisations to create advantage. For current thinking check out the IdeaPort blog on this site.

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A recently released book by Wharton titled "Go Long - Why Long-Term Thinking Is Your Best Short-Term Strategy" has some useful insights for long term thinkers. The authors discuss some of these in this interview: lnkd.in/f2YBa3hlnkd.in/fD5tNRK

A speech delivered in 1998 by Neil Postman about the perils of technology worship proves extremely relevant about today's society. Highly recommended and accessible read for philosophers of technology lnkd.in/fjsdMTFlnkd.in/fycwBHG

Category / Innovation PROCESSES

There’s a long history of ‘corporate antibodies’ blocking innovation. The challenge stems from the issue of KPIs vs innovation. Most organisations have a well tuned engine room that produces profit. It’s specifically tuned to eliminate variation and maximise efficiency. These two goals don’t fit well with innovation which can be messy, iterative and inefficient. In this blog post, Steve Blank offers a cunning plan to work around the anti-bodies in a manner that both enables innovation and builds capability. The essence of the idea is that organisations need a set of processes for the engine room, and another set for innovation.

In his post Steve even offers templates for how a leadership team should manage implementing this process, which is something that is increasingly rare to find online (where it’s easy to be a innovation expert on theory, but much harder to prove real-world credentials).

It’s a highly recommended read if you’re in a large organisation, and banging your head against the wall trying to move the dial on innovation.

This HBR article from a couple of years ago has some good techniques for helping make better bets about how the future might evolve for a specific outcomes. They would be useful when you’re at the pointy end of a scenario exercise, rather than at the start. The entire piece is a worthwhile read, and my three main relevant takeaways can be summarised as:

When estimating data points that may occur in the future, make three estimates – one high, one low, and then, by extension, one that falls in the middle. The middle estimate is much more likely to be accurate.

In a similar fashion, make two estimates about future data points, then take the average. Note that it’s important to take a break between making the two estimates in order to avoid bias.

Create a premortem i.e. imagine a future failure and then explain the cause.

Although it dates from 2014, this McKinsey article is full of gems for organisations seeking to connect foresight, strategy and innovation at the highest level. It’s a solid five minute read but I’ve culled the absolute highlights below:

Governance suffers most when boards spend too much time looking in the rear-view mirror and not enough scanning the road ahead. Directors still spend the bulk of their time on quarterly reports, audit reviews, budgets, and compliance—70 percent is not atypical—instead of on matters crucial to the future prosperity and direction of the business.
The alternative is to develop a dynamic board agenda that explicitly highlights these forward-looking activities and ensures that they get sufficient time over a 12-month period.

“Boards need to look further out than anyone else in the company,” commented the chairman of a leading energy company. “There are times when CEOs are the last ones to see changes coming.”

This is a fascinating and long read about where the world is going to in regards to the next wave of innovation. It’s also insightful when considering where innovation will focus in the coming years:

Intrapreneurship and skunkworks are replaced by internal innovation processes which, while ineffective at producing radical innovations, allow controllable and measurable sustaining innovation. Money that would have been spent financing external innovation is redirected back to corporate development and, perhaps, even corporate controlled research labs.

These sorts of controllable and measurable innovation processes are already taking hold, both inside and outside the corporate world. It’s no coincidence that the buzzwords in innovation the last few years have been ‘lean’ and ‘customer development.’ While these both claim to be new discoveries, they are actually old practices that fell out of favor during the installation period because they aren’t suited to radical, fast-moving innovation; they only work when innovation is slower and more predictable: Steve Jobs could not have used customer development to create the Apple computer; Henry Ford’s quip that if he asked his customers what they wanted they would have said “a faster horse” are both acknowledgements of this.

The hallmark of a new technological revolution is that the innovation trajectory is unknown: lean doesn’t work on early adopters because they will use anything novel (i.e. the Altair as an MVP was pretty well useless in predicting what mainstream customers would want in a personal computer); customer development doesn’t work when you’re developing a general purpose technology. In general, you can’t iterate your way to radical innovations, almost by definition.

There’s a plethora of good advice in this article on innovation, especially the sections on art, business and innovation. However the one piece that will probably ring true for large organisations is this:

At most companies that care, you can set up creative, innovative environments and teach everyone to function better within them. You can hire a Picasso. Or, better yet, you can hire several Picassos: Several extraordinary people with complementary talents, who each have strengths that the others don’t have. Having picked them, you can empower them. You can put them with 15 other people as good as they are, but in different ways. You then get a type of generative activity and creativity that you don’t get otherwise. Even then you still have to take that creativity, massage it, and create an output that’s valuable for a customer. Which is hard for most companies to do.

Meanwhile, odds are that the rest of your organization, especially middle management, will strive to eliminate them. So you need to give them top cover.

I’ve posted previously about the need to link foresight to strategy to innovation, but rarely seen concise articles that elaborate on this. Strategy and Business has just posted one, and it’s worth looking at. Here’s the first section of the article:

Strategic planning is different from innovation. When developing a strategy, you decide what your activities will be in the future, and you have to stay true to your predetermined course to see results. Furthermore, your plan includes a set of activities that you know how to do. But with innovation, your course of action is inherently unpredictable, and you know in advance that you’ll have to learn to do things that you don’t yet know how to do. Only after your innovation succeeds will you know what those things are.

That’s why your business strategy and your innovation practice must be kept apart: otherwise, the consistency of your plans may constrain your creativity and verve, and the surprises of innovation may distract you from your plan. At the same time, your strategy and innovation must also be aligned, or your organization will be incoherent and risk dissipating your efforts. So how can you integrate strategy and innovation, but still keep them separate?

The answer is simple in principle, but hard in practice. You probably have an annual strategy cycle of some kind; in most cases, the corporate office gives guidance to each unit, and then each unit maps out a strategic plan for the next one to five years. It is during this strategy cycle that you must ask the leaders of each unit to do two things:

1. Come up with a plan over the coming year for what that business unit knows how to do. This will involve about 99 percent of its time and activity.

2. Identify one or more innovations that the unit’s team would most like to tackle over that same year.

From strategy and business comes a quick read about the links between innovation and strategy. It misses the link between foresight and strategy, but makes it’s point well:

Strategic planning is different from innovation. When developing a strategy, you decide what your activities will be in the future, and you have to stay true to your predetermined course to see results. Furthermore, your plan includes a set of activities that you know how to do. But with innovation, your course of action is inherently unpredictable, and you know in advance that you’ll have to learn to do things that you don’t yet know how to do. Only after your innovation succeeds will you know what those things are.

The most recent McKinsey Quarterly has a concise article that sums up a multi-year research project by the organisation. As the title suggests, it breaks the findings into eight areas. While the article is rich in highly quotable insights, the one below caught my attention:

Innovation also requires actionable and differentiated insights—the kind that excite customers and bring new categories and markets into being. How do companies develop them? Genius is always an appealing approach, if you have or can get it. Fortunately, innovation yields to other approaches besides exceptional creativity.

The rest of us can look for insights by methodically and systematically scrutinizing three areas: a valuable problem to solve, a technology that enables a solution, and a business model that generates money from it. You could argue that nearly every successful innovation occurs at the intersection of these three elements. Companies that effectively collect, synthesize, and “collide” them stand the highest probability of success. “If you get the sweet spot of what the customer is struggling with, and at the same time get a deeper knowledge of the new technologies coming along and find a mechanism for how these two things can come together, then you are going to get good returns,” says Alcoa chairman and chief executive Klaus Kleinfeld.

One of the issues that leadership teams often wrestle with is the length of time it takes for innovation to bear fruit. I don’t think there’s a magic bullet for this, but that organisations should try a range of approaches. For large organisations, innovation at scale can be achieved through a range of software solutions including MindJet SpigitEngage. However it’s still hard to beat the face-to-face interaction of small teams racing against a clock in the same room. With that in mind a new book from Michael Schrage favours the 5×5 approach:

…half of Schrage’s new book is devoted to an innovation methodology called 5×5 that captures the benefits of experimentation. In the 5×5 approach, writes Schrage, “A minimum of 5 teams of 5 people each are given no more than 5 days to come up with a portfolio of 5 ‘business experiments’ that should take no longer than 5 weeks to run and cost no more than 5,000 euros to conduct. Each experiment should have a business case attached that explains how running the experiment gives tremendous insight into a possible savings of 5 million euros or a 5-million-euro growth opportunity for the firm.”

Schrage says that he’s been facilitating these 5×5 exercises in companies, under the auspices of MIT’s Sloan School of Management and the Moscow School of Management since 2009. The results: “There are always—without exception—at least three or four experiments that make top management sit up straight, their eyes widening or narrowing, dependent on temperament, and incredulously ask, ‘We can do that!?’”